BOP Indicator Analysis Buy & Sell Signals

BOP Indicator measures the strength of the bulls versus the bears by assessing the ability of each to push price to extremes areas.

BOP Indicator

++Balance--of--PowerBOP Indicator Analysis and Generating Signals

When using this Balance of market Power indicator, the zero line cross overs are used to generate Forex signals.

Center is marked as zero line, areas oscillating above or below are used to generate signals.

Buy - The scale is marked from 0 to +100 for bullish trend market movements

Sell - The scale is marked from Zero to -100 for bearish market movements

How to Generate Buy & Sell Signals with Balance of Power Indicator

Buy Signal

When the BOP indicator crosses above zero a buy signal is given.

Also when the ++Balance--of--PowerBOP Indicator is rising, the market is in an upwards trend, some traders use this as a buy signal but it's best to wait for the confirmation by the indicator moving above the zero mark. As this will be a buy signal in bearish territory and this type of signal is more likely to be a whipsaw.

Sell Signal

When ++Balance--of--PowerBOP crosses below zero a sell signal is given.

Also when the ##Balance--of--PowerBOP Indicator is declining, the market is in a downward trend, some traders use this as a sell signal but it is best to wait for a confirmation by moving below zero mark because this will be a sell signal in bullish territory & this type of signal is more likely to be a whipsaw.

Sell & Buy Signals - BOP Indicator

Divergence Forex Trading

In fx trading, divergences between the Balance of Power Indicator & price can be used to effectively spotting potential reversal and/or trend continuation points in currency movement. There are several types of divergences:

BOP Indicator Classic Divergence - Trend reversal signal

BOP Indicator Hidden Divergence - Trend continuation

Forex Trading Overbought Oversold Conditions with Balance of Power Indicator

This Balance of Power Indicator can be used to identify potentially overbought & oversold conditions in price movement.

• BOP Indicator Overbought/Oversold levels can be used to provide an early warning for potential trend reversals.
• These levels are generated when indicator clusters its tops & bottoms thus setting up the overbought and oversold levels around those values.

However, price may also stay at these over bought and oversold levels and continue moving in that direction for a while and thus its always good to wait until the Balance of Power Indicator crosses over the Zero mark.

From the example below, even though the Balance of Power Indicator showed price was oversold, price continued heading downward until the technical indicator crossed over to above Zero.

Technical Analysis - ##Balance--of--PowerBOP Indicator